{"id":57866,"date":"2022-04-07T08:30:39","date_gmt":"2022-04-07T06:30:39","guid":{"rendered":"https:\/\/www.bioecoactual.com\/?p=57866"},"modified":"2022-04-07T11:57:15","modified_gmt":"2022-04-07T09:57:15","slug":"need-to-talk-about-retail","status":"publish","type":"post","link":"https:\/\/www.bioecoactual.com\/en\/2022\/04\/07\/need-to-talk-about-retail\/","title":{"rendered":"We need to talk about retail"},"content":{"rendered":"

Retail<\/strong> is the crucial interface between the organic movement and consumers, the connecting point for people and products. So, the type of retail environment the organic sector operates in really does matter. While specialist stores actively engage, educate and inspire customers about organic and eco values, most big supermarkets chains want to be simply enablers of \u2018frictionless\u2019 transactions between store and shopper \u2013 and that\u2019s generally not good news for organic.
\n<\/p>\n

\"retail\"
\u00a9Bio Eco Actual. Organic bulk dispensers<\/figcaption><\/figure>\n

What kind of retail do we want?<\/h2>\n

In recent years so-called \u2018channel shifting\u2019 has been a striking feature of Europe\u2019s organic food scene, with supermarkets taking a bigger share of organic sales in several EU countries. It has led to warnings that retail diversity \u2013 an important ingredient for organic market growth \u2013 is under threat.<\/p>\n

Against this backdrop, the question \u2018what kind of retail do we want\u2019 is one we hear more frequently in the organic community. And with future organic prospects so interwoven with the future direction of retail, it\u2019s an increasingly urgent question.<\/p>\n

Hungry for organic<\/h3>\n

It\u2019s clear that mass channel grocery retail has been developing a growing appetite for organic on both sides of the Atlantic. It\u2019s an issue that\u2019s already the subject of hot debate. Leading organic commentators have warned that supermarket dominance of organic retail often leads to downward price pressure. Amarjit Sahota<\/strong>, founder of London-based analyst Ecovia Intelligence<\/strong>, says this has \u201csqueezed the margins of legitimate businesses that have been developing this market for 20 to 30 years\u201d. Sahota describes supermarket control of organic sales in some European countries \u2013 he cites Denmark, Austria and Switzerland, where share is 80% and upwards \u2013 as \u201cformidable\u201d.<\/p>\n

About 10 years ago, big box retailers in the US such as Walmart and Target began aggressively moving into organics, partly as a way to revive a flagging grocery sector. When in 2018 Walmart relaunched its organic sub-brand Wild Oats, it priced the 100-product strong range at 25% lower than the national organic brands it stocked in its own stores. The price tactics used by the supermarkets have led to channel \u2018flipping\u2019 of whole organic categories (for example, in just 10 years, organic dairy went from being 70% sold through independent natural food stores in the US, to being 70% sold through mainstream grocery).<\/p>\n

Laura Batcha<\/strong>, CEO of the (US) Organic Trade Association<\/strong> says that the natural channel has been forced to \u201cadapt and re-differentiate\u201d in the face of such powerful competition. And, she says, independents have been staging a comeback. In fact, Batcha sees a \u201cflipside\u201d to the channel-shifting trend, noting is that it is \u201ccreating much wider access to organic foods in the US market.\u201d Amarjit Sahota also recognises benefits as well as challenges arising from greater supermarket participation. He says: \u201cThe big retailers are investing significantly in organic. So, I tend to see this more as a success story \u2013 the more companies that come on board, the better it is for the organic movement\u201d.<\/p>\n

A call for diversity<\/h3>\n

Dr Helga Willer<\/strong> of the Swiss-based organic research body FiBL<\/strong>, believes the key issue is the diversity of retail outlets. \u201cIf one type of outlet were to take over everything we would have a problem. Just as our organic system thrives with diversity, I think the health of the organic market is also dependent on the diversity of retail outlets.\u201d<\/p>\n

Many smaller organic brands are unaware that securing supermarket shelf-space comes at a high cost<\/p><\/blockquote>\n

In a major new report from the French organic body Agence Bio<\/strong>, retail diversity is strongly corollated with stable organic market growth. The report \u2013 The Organic Sector<\/em> in the European Union \u2013 shows how the food retail \u2018mix\u2019 (as it applies to organic) in Europe varies considerably from country to country. Quoting the French-German research group Ecozept, the report shows how a more diversified retail mix enables the organic sector to be more resilient, and better able to manage fluctuations in demand and price.<\/p>\n

One chart in the Agence Bio report gives a striking illustration of the retail mix in 23 European countries. As well as highlighting the dominance of mass retail in several countries (Austria at 82% market share, Finland at 80%, Ireland 80%, Denmark 74%), it also reveals the countries where specialist organic chains have the most powerful presence. These are a major feature of the retail mix in Belgium, France, Spain, Italy and Greece, with store numbers running into the hundreds (for example, in France, Biocoop operates 758 outlets, while La Vie Claire, Naturalia, Bio Monde, Bio C\u2019Bon and Les Comptoirs de la Bio have 380, 250, 225, 108 and 94 stores respectively). In some countries, specialist chains barely exist. This is true of the UK, where chains such as Planet Organic and Whole Foods Market have less than 20 stores between them, but where online, box schemes and small independent stores now play a more important role.<\/p>\n

Nordic outliers<\/h4>\n

Countries with stronger organic markets typically have a more diverse retail make-up. The Nordic region is a curious exception. In Denmark, Sweden and Finland supermarkets dominate organic retail. But these countries are all organic success stories (in Denmark and Sweden organic has an impressively high share of total food retail, at around 13% and 10% respectively). So, what does the Nordic experience tell us? Are Denmark and Sweden more than just unusual outliers?<\/p>\n

A crucial factor behind the two countries\u2019 organic success is the strength of market collaboration, especially between leading organic bodies and major retailers. Here, the country\u2019s supermarket chains are seen as collaborators and partners \u2013 if not quite friends. Winning over the country\u2019s major retailers has been a top priority at Organic Denmark. The organisation has literally worked its way through all the major supermarkets, persuading them about the organic opportunity. It has even brought the big discounters onside \u2013 Netto Denmark, for example, now accounts for over 12.2% of all organic sales in the country.<\/p>\n

Supermarket activists<\/h4>\n

However, there are features of the Danish and Swedish supermarket scene that make it a more fertile environment for the organic sector. For example, some of the major players are arguably more progressive culturally and philosophically. Sweden\u2019s ICA Group has a \u2018For a Good Tomorrow\u2019 mission, linked to health, environment and social inclusivity metrics. The Coop grocery chains in Denmark and Sweden have had a long and serious involvement with organic. Coop Sweden\u2019s private label organic \u00c4nglamark (launched over 30 years ago) totals over 750 products, and regularly wins \u2018green brand of the year\u2019. Coop Denmark\u2019s commitment to organic is such that it commands a whopping 35% share of all organic food sales in the country. Coop\u2019s Danish arm has also launched a business-wide \u2018Green in Front\u2019 campaign, aimed at helping shoppers make more climate-friendly food choices.<\/p>\n

More unusually, Coop engages in conspicuous organic advocacy, on occasions taking on the role of supermarket activists. Coop Sweden\u2019s \u2018Ekoeffekten\u2019 (organic effect) campaign even landed it in court, after pesticide industry groups objected to its research showing how switching to organic removed the chemical load found in urine samples of a family with young children who had previously eaten a conventional diet. Coop Denmark also came under attack for a similarly hard-hitting campaign.<\/p>\n

When big is bad<\/h4>\n

But there is a darker side to the supermarket system. Many suppliers quickly discover that aggressive \u2013 sometimes abusive, even illegal \u2013 commercial practices, are part of supermarket DNA. And as R\u00e9mi Delescule\u2019s 2021 documentary Supermarkets: The end of the Empire?<\/em> (Arte France<\/strong>) revealed, the collapse of the hypermarket model has led to some of Europe\u2019s giant supermarket operators behaving in ever more desperate ways. The film\u2019s opening sequence sets the scene. In it, a buying manager at a leading supermarket chain explains the company\u2019s technique for softening up suppliers: “What is important is to break the legs of suppliers. Once on the ground we start negotiating,\u201d he says. In anther scene a brand owner describes the \u201cpsychological warfare\u201d that takes place in stark, deliberately overheated interview rooms without access to water.<\/p>\n

Preserving retail diversity must be a top priority<\/p><\/blockquote>\n

Many smaller organic brands are unaware that securing supermarket shelf-space comes at a high cost. Newly listed brands can expect to be hit by a barrage of controversial charges including pay-to-stay fees, free stock demands, \u2018marketing contributions\u2019 and retrospective discounts. Supermarkets also often want to tie suppliers into exclusive dealing arrangements, preventing them from trading with other multiple retailers.<\/p>\n

Contracts (if they are written down at all) are typically titled in favour of the supermarkets, making suppliers vulnerable to capricious commercial behaviour. Giving evidence to an investigation of UK supermarkets by the Competition Commission, one organic potato farmer explained how he was told by a major supermarket he must spend \u00a3250,000 on a new crop washer to retain its business, which he did. Several months later the supermarket delisted the supplier without explanation.<\/p>\n

\"retail\"
\u00a9Bio Eco Actual. Fresh vegetable aisle<\/figcaption><\/figure>\n

When we whistle, you jump!<\/h4>\n

The heavily one-sided trading terms demanded by large supermarkets are one of the main reasons there is now a flourishing organic \u2018veg box\u2019 channel. Guy Singh-Watson<\/strong>, the founder of UK farm-based retailer Riverford Organic<\/strong> remembers the \u201cludicrous waste\u201d involved in supplying supermarkets in Riverford\u2019s early days. Interviewed for the Humans of Hospitality podcast, Singh-Watson recalls: \u201cWe used to have to plant two lettuces for each one we sold to a supermarket because you have to make sure you have availability. If you don\u2019t have availability of what they want to buy, even if it\u2019s more than what they agreed to buy, you\u2019re in big trouble.\u201d<\/p>\n

The nature of the supermarket-supplier relationship was driven home to Singh-Watson one day when he questioned a supermarket buyer\u2019s instruction. \u201cWhen we whistle, you jump!\u201d, came reply. Singh-Watson, who had been building a packing house to service the supermarket\u2019s business, walked out of the meeting and set about destroying the building with a sledgehammer. \u201cI just took out my aggression and that was the end of supplying that supermarket.\u201d Today, Riverford, an employee owned company, delivers over 80,000 veg boxes a week, producing annual sales of \u00a3100 million.<\/p>\n

Controlling the narrative<\/h4>\n

There is also an argument that the supermarkets\u2019 centralised distribution model is fundamentally unsustainable, and antithetical to core organic principles. At its most extreme, this results in fresh produce being transported by truck from one European country to a supermarket\u2019s central distribution centre in another, and then freighted straight back to its country of origin to be stacked on shelves in local stores.<\/p>\n

The organic industry commentator Ronald Van Marlen says that when Big Food takes charge of the organic food supply chain, it starts to control the organic narrative. Van Marlen has warned that a \u201csilent takeover\u201d of organic is leading to a \u201cshrinking of organic ambitions\u201d as part of a mainstreaming of the organic food industry. He argues that food multinationals want to reduce organic to a box-ticking exercise, and water down organic principles (\u201cbasically getting rid of the difficult ones\u201d).<\/p>\n

Twenty years ago, when major retailers first showed a serious interest in organic food, they weren\u2019t especially interested in organic values. They saw organic simply as another product category, and thus subject to standard category management. This early \u2018categorisation\u2019 of organic \u2013 a holistic approach to agriculture based on the principles of health, ecology, fairness and care \u2013 diminished a large part of its intrinsic value. Some in the organic sector would argue this approach persists today.<\/p>\n

Why independents matter<\/h4>\n

One group of retailers has been a constant feature of the organic food scene almost since the beginning. Thousands of small, independently owned natural food stores and health food shops across Europe played a key role in building a market for organic and have given hundreds of organic brands their first break.<\/p>\n

Craig Sams<\/strong>, founder of Green & Black\u2019s<\/strong> and a leading pioneer of the UK organic scene, is in doubt about the vital role independent natural food stores have played in creating a market for organic food. \u201cThey made it happen. The organic food scene would not be where it is today without them. When people could get their entire food requirements from a natural food store that was a huge change.\u201d He maintains these stores are as relevant, and as important, today. \u201cThese specialist independents offer something different. A committed organic food user doesn\u2019t want to have to wander down aisle after aisle in a supermarket to find their requirements when it is all there in a natural food store, along with all the novel introductions that suppliers to the natural and organic retail trade are coming up with\u201d.<\/p>\n

One of the lessons of the pandemic has been that people want to support local food economies<\/p><\/blockquote>\n

Cheryl Thallon<\/strong>, founder of Viridian Nutrition,<\/strong> is long-term champion of independent, community retailers. She says independent retail is where real innovation happens. \u201cSupermarkets are trend followers, not trend makers. They\u2019re much less likely to take a risk on a new product or brand than a small retailer, who is always looking for something different, something with an edge. Independents will act as brand ambassadors, and be evangelists for natural and organic. They\u2019re loyal too. They won\u2019t drop a brand when they aren’t giving them the margin, say.\u201d<\/p>\n

Ethical gate-keepers<\/h4>\n

Thallon<\/strong> believes independents play a vital role in their communities too. \u201cThe thing I like is that independents are supporting their towns. So many of the big supermarkets and hypermarkets are on the edges of towns and cities. Independent natural food stores and health food stores are very often embedded in their local communities. They provide a place to have conversations, learn, sit down and have a cup of coffee.\u201d<\/p>\n

Specialist natural and organic retailers are also \u201cethical gatekeepers\u201d, says Thallon. \u201cIndependents are ethical hard-core. They\u2019re the ones that say \u2018hold on, let me ask more questions about this\u2019. They want to dig deeper, and keep the brands honest.\u201d<\/p>\n

Where do we go from here?<\/h4>\n

In reality, there is no simple answer to the question \u2018what kind of retail do we want\u2019. It produces very different answers depending on who you ask, and where you ask it. The often heard view that \u2018small is good, big is bad\u2019 is difficult apply in this context and to some extent denies reality. The fact is, around 70% of organic food sales occur in supermarkets (as a European average). Supermarkets have dramatically increased access to organic, and often provide a more affordable entry point. They are also increasingly invested in organic. For example, in February Carrefour announced further expansion of its So.bio and Bio C\u2019Bon organic chains that it acquired in 2018 and 2020 respectively, creating 600 new jobs. There is the chance, too, that international climate targets and public pressure will force structural change on supermarkets, making their operations more sustainable.<\/p>\n

But to be clear, preserving retail diversity must be a top priority. A plurality of food retail approaches is healthy for citizens and for the environment. Specialist organic retail chains can be powerful agents for change, along with progressive online retailers. But there is a particularly strong case for supporting and nurturing an ecosystem of local, independent retailers, especially when they, in turn, provide customers for local organic growers and processors. One of the lessons of the pandemic has been that people want to support local food economies. The independent retail model, based on replicability rather scaleability, is perfectly tuned for our times.<\/p>\n

Author:\u00a0<\/strong>Jim Manson, Journalist<\/p>\n

Subscribe<\/a>\u00a0at our Newsletter and be up to date with the latest news from the Organic Sector<\/strong><\/p>\n

Bio Eco Actual<\/strong>, International Organic Newspaper
\n<\/em>Read Bio Eco Actual<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Retail is the crucial interface between the organic movement and consumers, the connecting point for people and products. So, the type of retail environment the organic sector operates in really does matter. While specialist stores actively engage, educate and inspire customers about organic and eco values, most big supermarkets chains want to be simply enablers […]<\/p>\n","protected":false},"author":419,"featured_media":57854,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5210],"tags":[],"class_list":["post-57866","post","type-post","status-publish","format-standard","has-post-thumbnail","category-latest-organic-news"],"yoast_head":"\nWe need to talk about retail - Bio Eco Actual<\/title>\n<meta name=\"description\" content=\"Retail diversity is under threat. 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